Top French court approves 75% company tax on high salaries

France's top court Sunday approved a proposal for companies to pay 75 percent tax on annual salaries exceeding one million euros in line with President Francois Hollande's drive to limit executive pay at a time of economic hardship, AFP reports. The Constitutional Council had earlier in the year thrown out one of Hollande's key campaign pledges to impose a 75 percent tax on individuals earning more than one million euros ($1.35 million). After that setback, Hollande in March mooted a proposal to make companies pay the tax on salaries exceeding this limit. It will be imposed on salaries paid in 2013 and 2014. According to the French government, this tax will affect some 470 companies and enterprises and about 1,000 people. Hollande had said the idea was "not to punish" but that he hoped it would spur companies to lower executive pay at a time when the economy is sluggish, unemployment is soaring and workers are being asked to accept wage cuts. Professional football clubs in the French league set-up will also have to pay the 75 percent tax on top earners apart from Monaco, which is subject to vastly different tax laws in the principality. Hollande had pledged to rein in spiralling unemployment by the end of 2013. The government's belt-tightening budget for 2014 aims to bring down the public deficit from the current level of 4.1 percent to 3.6 percent of gross domestic product (GDP) through spending cuts totalling 15 billion euros ($20 billion) and new taxes. The surtax on companies posting a turnover of more than 250 million euros has been doubled, a measure that is expected to bring in 2.5 billion euros a year.